[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"detail-sidebar-cat-0-en-105":3,"doc-seo-324884-105":59,"doc-detail-324884-en":131},{"code":4,"msg":5,"data":6},0,"success",[7,13,18,23,28,33,38,43,48,51,55],{"id":8,"doc_module":4,"doc_module_name":9,"category_name":10,"show_sort_weight":11,"slug":12},1,"Document","Story & Novel",90,"story-novel",{"id":14,"doc_module":4,"doc_module_name":9,"category_name":15,"show_sort_weight":16,"slug":17},2,"Literature",80,"literature",{"id":19,"doc_module":4,"doc_module_name":9,"category_name":20,"show_sort_weight":21,"slug":22},4,"Exam",70,"exam",{"id":24,"doc_module":4,"doc_module_name":9,"category_name":25,"show_sort_weight":26,"slug":27},5,"Comic",60,"comic",{"id":29,"doc_module":4,"doc_module_name":9,"category_name":30,"show_sort_weight":31,"slug":32},6,"Technology",50,"technology",{"id":34,"doc_module":4,"doc_module_name":9,"category_name":35,"show_sort_weight":36,"slug":37},7,"Healthcare",40,"healthcare",{"id":39,"doc_module":4,"doc_module_name":9,"category_name":40,"show_sort_weight":41,"slug":42},8,"Research & Report",30,"research-report",{"id":44,"doc_module":4,"doc_module_name":9,"category_name":45,"show_sort_weight":46,"slug":47},9,"Religion & Spirituality",20,"religion-spirituality",{"id":46,"doc_module":4,"doc_module_name":9,"category_name":49,"show_sort_weight":46,"slug":50},"World Cup","world-cup",{"id":52,"doc_module":4,"doc_module_name":9,"category_name":53,"show_sort_weight":52,"slug":54},10,"Lifestyle","lifestyle",{"id":56,"doc_module":4,"doc_module_name":9,"category_name":57,"show_sort_weight":24,"slug":58},19,"General","general",{"code":4,"msg":60,"data":61},"ok",{"site_id":62,"language":63,"slug":64,"title":65,"keywords":66,"description":67,"schema_data":68,"social_meta":124,"head_meta":126,"extra_data":128,"updated_unix":130},105,"en","forecasts-and-sunspots-looking-back-for-a-better-future","Forecasts and Sunspots: Looking Back for a Better Future","","Economic forecasts are widely used by central banks to guide monetary policy, including settings tied to inflation targets, even though forecast accuracy is debated. This Economic Commentary argues that relying on forecasts can be destabilizing by increasing price volatility. It explains how expectation-driven dynamics allow random events like “sunspots” to affect economic variables, creating feedback loops between public beliefs and policy actions. The text contrasts forward-looking policy with a predominantly past-inflation response.",{"@graph":69,"@context":123},[70,84,106],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/forecasts-and-sunspots-looking-back-for-a-better-future/324884/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/forecasts-and-sunspots-looking-back-for-a-better-future/324884.png","ImageObject",300,407,{"name":92,"@type":93},"Genevieve","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-11-04","2026-09-21",true,{"@type":102,"interactionType":103,"userInteractionCount":105},"InteractionCounter",{"@type":104},"ViewAction",13,{"@type":107,"mainEntity":108},"FAQPage",[109,115,119],{"name":110,"@type":111,"acceptedAnswer":112},"Why do central banks rely on economic forecasts in monetary policy?","Question",{"text":113,"@type":114},"Central banks use forecasts to anticipate how inflation will evolve in response to their actions. Even when forecasts are imperfect, having some guidance is better than relying on past outcomes alone.","Answer",{"name":116,"@type":111,"acceptedAnswer":117},"How can forecast-based policy lead to excessive price volatility?",{"text":118,"@type":114},"Because policy decisions based on forecasts can become expectation-driven, inflation may rise simply because the public expects it to. This can amplify shocks and cause large swings in prices.",{"name":120,"@type":111,"acceptedAnswer":121},"What are “sunspots” in the context of economics?",{"text":122,"@type":114},"Sunspots are events that affect economic variables only because the public believes they do. They create self-fulfilling expectations, so beliefs can directly generate the outcome people anticipate.","https://schema.org",{"og:url":83,"og:type":125,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":127,"canonical":83},"index,follow",{"doc_id":129,"site_id":62},324884,1790127738,{"code":4,"msg":5,"data":132},{"doc_id":129,"user_id":133,"nickname":92,"user_avatar":134,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":135,"file_id":136,"file_url":137,"file_type":138,"file_size":139,"view_count":105,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":24,"language":140,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":141,"faqs":142,"seo_title":143,"seo_description":67,"update_tm":144,"read_time":105,"preview_page_count":4},1374391974585,"https://ap-avatar.wpscdn.com/davatar_276721f389ce27ea32af1340a28f341c","Charles T.Carlstrom and Timothy S.Fuerst  \nS  \nome would argue that economicforecasts are about as accurate as sooth-sayers and weather forecasts.Yet centralbanks all around the world make suchforecasts and use them when conductingmonetary policy.In fact,countries withinflation targets(Canada,New Zealand,and the United Kingdom.for example)ll base their policy actions on inflationforecasts.As Federal Reserve ChairmanAlan Greenspan recently commented:\"Implicit in any monetary policy actionorinaction is an expectation of how thefuture will unfold,that is,a forecast.\"  \nThe recent funds rate increase in theUnited States is evidence that such fore-casts are used.Although there were fewsigns that current inflation was increas-ing,interest rates were raised at theAugust Federal Open Market Committeemeeting because it was feared that higherfuture inflation might very well be in theoffing.²Most accept that the monetaryauthority must be proactive to keep infla-tion from increasing.This EconomicConmentary discusses why such a pol-icy may be destabilizing.  \nThe reasons to use forecasts are in somesense obvious.Because the monetaryauthority's actions will ffect the future,it seems wise to have an idea of what thefuture is likely to be in the absence of(and in response to)its actions.Afterall.if you want to arrive at some destination,you need to have a good idea of whereyou're heading.Before driving fromCleveland to Atlanta,you consult a mapf the goal of monetary policy is to stabi-lize the inflation rate,then the monctaryauthority's natural course of action is tolook ahead and respond to what inflationis expected to be.  \n# Forecasts and Sunspots:Looking Back for a Better Future\n\nThe alternative course of action is torespond only to what has already takenplace.This is a bit like trying to make thedrive to Atlanta by looking out of therearview mirror the entire way.Such anapproach seems doomed to fail.If themonetary authority decided to stabilizeinflation with this approach,it would tryto maintain an inflation objective by responding only to past inflation.Becausea policy that responds to past inflationreacts not only to shocks that have a last-ing impact but also to those with no bear-ing on future inflation,the result wouldbe large swings in prices  \nDespite the fact that a \"rearview\"ap-proach can never deliver price stability.some continue to argue against usingforecasts when conducting monetarypolicy.Milton Friedman warned thatattempts to fine-tune output oreveninflation by acting preemptively wouldusually make matters worse.Because ittakes long and variable amountsof timefor changes in the money supply toaffect prices,he argued that forward-looking monetary policy was futile andproposed instead to let money growthexpand at aconstant rate.  \nTo many.however,this argument ringshollow.While forecasts are not perfect,conducting monetary policy withoutthem would be foolish,akin to decidingto carry an umbrella without consultingthe local weather channel.Surely,even abad weather forecast is better than none.Despite this cogent reasoning.this Eco-nomie Commentary argues that the useof such forecasts has a serious downsidein that basing monetary policy decisionson forecasts may lead to excessive vol-atility in prices.This occurs not just  \nTo head off inflation before it getsstarted,central banks must use fore-casts.But using forecasts to determinemonetary policy actions introducesthe possibility that inflation willincrease just because the publicexpects it to.This Economic Commen-ary explains how random events—sunspots—can affect economic sys-tems and lead to volatility in prices.The authors suggest that sunspots canbe avoided with an approach thatresponds predominantly to past,rather than predicted,inflation.  \nbecause the monetary authority may re-spond to bad forecasts but also becausethe use of forecasts makes the economyvulnerable to a penicious type of eventknown as a sunspot.  \n## ■ Sunspots and Lack\n\nof Coordination  \nThe dfference be","cbCaikuYeW37SbzM","https://ap.wps.com/l/cbCaikuYeW37SbzM","pdf",1122288,"English","# Forecasts and Sunspots:Looking Back for a Better Future\n## ■ Sunspots and Lack\nof Coordination","[{\"question\":\"Why do central banks rely on economic forecasts in monetary policy?\",\"answer\":\"Central banks use forecasts to anticipate how inflation will evolve in response to their actions. Even when forecasts are imperfect, having some guidance is better than relying on past outcomes alone.\"},{\"question\":\"How can forecast-based policy lead to excessive price volatility?\",\"answer\":\"Because policy decisions based on forecasts can become expectation-driven, inflation may rise simply because the public expects it to. This can amplify shocks and cause large swings in prices.\"},{\"question\":\"What are “sunspots” in the context of economics?\",\"answer\":\"Sunspots are events that affect economic variables only because the public believes they do. They create self-fulfilling expectations, so beliefs can directly generate the outcome people anticipate.\"}]","Forecasts and Sunspots: Looking Back for a Better Future | PDF",1789969125]